Student loan repayments are completely unfair

[Sammy900]

I've thought for ages that student loan repayments are a complete rip off. I'm so glad they are now all going under review.

They were mis-sold at the time as a minor "graduate tax" that you'll barely notice and there weren't any other options available to enable low income households fair access to higher education.

I didn't realise then that this would turn into a lifelong debt, with snowballing interest that makes it impossible to clear.

I'm on the original plan 1 which just goes on and on until I'm 65.

The next plan 1 deal after 2006 then decided that 25 years was a fair term (not 47 years!!). Such a huge difference in what will be paid back.

Any other standard loans have much shorter terms.

It was based on the assumption that you would continue to be a low earner for the rest of your life and not move up the career ladder.

I really think that the government / treasury should look into the fairness of the terms of the original plan 1 loans too not just Plan 2.

I think you can submit your case to your local MP and with the treasury committee if you feel that you are paying back a student loan on unfair terms and now is the time to do so.

I really hope this gains momentum and something can be done about it finally.

What are your thoughts?

Me too! another really valid point about it being sexist

I'm just looking at filling in the Treasury survey now

I'll come back and update if I get anywhere with it

I've just seen this link to a petition from thread from a few weeks ago. Adding it here so that others can sign.
https://petition.parliament.uk/petitions/756832

@Sammy900 You were given money up front by the state. You don’t need to pay it back. You pay according to earnings and you definitely knew that unless you were permanently under a stone and read nothing. You did know this. You are right that they have messed with interest rates and I disagree with that but missold? Come on. Get the money from a bank then! See what a loan really looks like.

https://petition.parliament.uk/petitions/756832

As a tax payer I’m not signing that petition, it’s juvenile. Simply cutting interest charges in isolation will not fix the issue. Whatever is introduced still needs to be sustainable. There is no reason to cut interest on Plan 1. And we need to look at how universities are operating.

I also think we can look at how we treat different degrees, I’d support this more for professions we desperately need like teaching and medical for example, but not for every Tom, Dick and Harry to go do a humanities degree to end up in Tesco (signed, a humanities graduate).

Unless nurses want managerial responsibility they can’t earn more than £38k. They will be paying back forever and accruing interest

I think ive only been able to pay towards mine once a year when they take about £20-40 off my yearly bonus (as Im only been able to work part time after returning to work after my last suicide attempt so I'm only just paying income tax and definitely not enough make repayments ) . Over 13 years I dont think I've made much a dent 😶 I mistakenly thought mine was written off after 30 years and then looked it and realised I'm on plan 1 (that said I think the interest rate is only 3.2%) so it's 65.

I can't really complain though. It's not anyone fault but my own I guess, I ended up very ill (after having mental illness issue since 11) and was too unwell to work at all, then couldn't work full time. That's on me. But would like to stress not what I went into uni at 18 thinking it hoping that's what the outcome would be.

I thought I'd get my degree, I'd move make a fresh start, work my way up, not just in a job but have a career, thought I'd have settled down, found my independence and lives really.

Unfortunately it all went to shit. 🤷🏻‍♀️ And at 39 I'm still trying to put the pieces back together (very slow process but might have some semblance of a life and not just exist before 40...if my physical health issues don't decide to continue ramping up and finish me off first 😬😭).

End of the day i took the loan, I owe the moneym I should and will if I can pay towards it.

But I do agree it was missold in a way
-The interest rates were never explained to us
-we were led to believe we'd been paying it back over a shorter period (plan 1)
-we were repeatedly told it wasn't like a normal debt or loan
-we were also told making repayments wouldn't affect us finally inb the future (Except it does effect affordability and IS used)

I’m in the US where having a loan over 100,000 is not uncommon at all. The debt never gets reduced and will follow you until you die and then your children will be responsible for it. I remember working with a woman who was specifically working so her sons wouldn’t need to take out student loans and it inspired me to do the same when I got married. We have paid over $200,000 to send one ds to a public US University but I don’t begrudge it one bit.

@TowerRavenSeven In the uk, many would not save this in a lifetime. Many have no culture of saving and expect the state (taxpayers) to pay for students. This worked until the huge expansion of the university sector but we are addicted to state handouts. It’s not possible for general taxation to pay for this but I fundamentally disagree that it’s huge burden or that it’s the same as standard loan from a back. It’s plainly not.

Culture of saving? I mean possibly but it is really expensive to live here compared to the states. House prices and they recoil in horror and our petrol prices. On the other hand we don't need health insurance to get antibiotics.

It's a loan it's not free tax-payers handouts.

Also students then become graduates who then become employed also pay their taxes.

With the ridiculous interest rates and life-long contracted terms this debt is not only paid back (the original loan amount) but also sometimes double back in interest alone plus standard taxes on top.

That's astonishing! But because it's the norm doesn't make it right or fair. Really feel bad for people in this situation.

It stops becoming just a loan though if people borrow money from the state and don’t pay it back in line with inflation. The £20,000 I borrowed 20 years ago is worth a lot less today if I were to pay the £20,000 back today. Insisting on loans being interest free is expecting a form of state hand out.

I suppose it could be argued that all loans (not just student ones) become free handouts if a person is not able to afford to pay them back, declare bankruptcy or get their debt written off after 7 years after no payments, etc.

@Sammy900 well yes…what’s your point? That’s why there are financial penalties if you struggle to pay back commercial loans, and why student loans aren’t like normal loans.

I was on the original plan 1 and have paid it all back. I think I was around 36 when I finished paying it off. I am not a high earner (I was working at NHS band 4, then band 5 for the majority of the time, then band 6 for a few years, and then band 7 for maybe the final few years), but am single with no kids, and have always lived well within my means so I was able to overpay some months where I could. I’m glad I chose to do that then, what with the huge increases in cost of living now.

I could understand the annoyance if you had someone who set out intending to be a perpetual student and to remain in higher education without ever intending to work or pay their loans back.

I doubt that there are many people like that.

Most graduates are faced with the reality that they will start off in the world of work with a huge debt hanging over them, which continues on until they are 65 for some.

It starts accruing interest straight away, even when still a full-time student and unable to pay any of it back (which the government recognises, hence the threshold to qualify to be able to pay it back) yet does nothing about.

Most months the compounding interest accrued is more than the payments made back so it is a never-ending "interest on interest" debt and a life long burden.

It is treated by the government as both a standard loan and a tax when they like and can change the terms after the contract was signed in retrospect.

There is no autonomy on how to manage repayments, say if you had two types of loan on plan one with two different terms it all just goes into the same pot.

It is considered to be a life long debt but doesn't account for life events rendering people unable to work-full time such as maternity leave or illness and the loan just sits there gathering more debt.

It is discriminatory.

It is the only way for low income individuals to access higher education and work towards a professional career, there are hardly any apprenticeship roles or opportunities to learn while you work.

All degrees are treated the same but some lead to roles in essential public services and people who want to train to be a nurse or allied health professional, social worker etc require a degree to be able to do so.

There are many more examples of why the student loan system is a mess and unfair and people are being penalised for wanting to do well and pay their taxes like everyone else.

Some students are coming out with 90k snowballing debt and therefore huge repayments for their entire life, how can this be considered to be ok?

It would be lovely if like ordinary loans they got wiped off after 7 years if you couldn't pay it back...yes please!

@Sammy900 ordinary loans are not simply written off after 7 years, I’m not sure if you’re financially illiterate or being obtuse. You are inconvenienced by your own mostly fair plan 1 loan because of your own life choices and trying to jump on the plan 2 and later band wagon currently happening which is a completely different situation to plan 1.

You are not in the same situation as plan 2 students, you are not paying more interest than you are paying off unless you’re earning so little you’re not at the threshold, and that’s on you. I think you’re being incredibly disingenuous trying to call out out the whole system when you fundamentally misunderstand it. If you want to take a stand about plan 2 and later crack on, but plan 1 is not the same.

Wow why are so angry? The whole student loan system is unfair and a mess in my opinion for reasons given above and many would agree. Thanks for your input though.

@Sammy900 I’m not angry? I just disagree with you and think you’re kidding yourself if you think the current wave against student loans will do anything to change yours. You’ve made zero attempt to recognise the contextual difference between the plans.

😱😱

Since there is no singular plan, there are unfair terms that exist between them simply due to the age you took out the loan. Pre and post 2006 on Plan 1 for example and the age-65 rule. Plan 2 terms are unfair as are the differences between the rest of them.

So I agree that there are unfair differences between plans absolutely.

So you recognise that plan 2 and later are fundamentally less sustainable than plan 1?

It would be lovely if like ordinary loans they got wiped off after 7 years if you couldn't pay it back...yes please!

You must know that this isn't how 'ordinary loans' work?

As someone with a plan 1 married to someone who has both a plan 1 and a plan 2 (because he did his teacher training a few years after graduating) - I honestly don't think there's much to moan about with a plan 1. I was horrified to see the difference between them and how much worse people a few years younger than me had it.

But it isn't a race to the bottom. Like anything. Cases can still be bad we don't have to rank them.